DOJ charges Russian nationals with laundering bitcoin in 2011 Mt. Gox hack

The US Department of Justice announced today that it charged two Russian nationals for crimes related to the 2011 hacking of Mt. Gox, the now-defunct crypto exchange that was one of the world’s largest at the time. Alexey Bilyuchenko and Aleksandr Verner are accused in the Southern District of New York (SDNY) of laundering about 647,000 bitcoins connected to the heist. In addition, Bilyuchenko faces separate charges in the Northern District of California (NDCA) related to running the infamous Russian crypto exchange BTC-e.

The pair are being charged in SDNY for conspiracy to commit money laundering. Meanwhile, the NDCA charges are for conspiracy to commit money laundering and operating an unlicensed money services business. The SDNY charges carry a maximum sentencing of 20 years for each defendant, while Bilyuchenko faces a maximum of 25 years in prison in the NDCA indictment.

The DOJ says Bilyuchenko, Verner and co-conspirators gained access to the server storing Mt. Gox’s crypto wallets in or about September 2011. Once they infiltrated the servers, the pair and their partners allegedly initiated the transfer of customers’ bitcoins to accounts they controlled. In addition, they’re accused of laundering the stolen bitcoins to accounts on other crypto exchanges also controlled by the group.

The conspirators allegedly negotiated and entered into a fraudulent “advertising contract” with a New York bitcoin brokerage service, a relationship they used to request regular transfers to “various offshore bank accounts, including in the names of shell corporations, controlled by Bilyuchenko, Verner, and their co-conspirators.” The DOJ says the group transferred over $6.6 million from March 2012 to April 2013.

“This announcement marks an important milestone in two major cryptocurrency investigations,” said US Assistant Attorney General Kenneth A. Polite, Jr. “As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency. Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide. These indictments highlight the department’s unwavering commitment to bring to justice bad actors in the cryptocurrency ecosystem and prevent the abuse of the financial system.”